I will preach this until the day I die… there is nothing more effective than a personal budget created using excel. It gives you the functionality to do pretty much whatever you need it to. In the following post, I’ll describe how my wife and I do ours, hopefully giving you some ideas that will help with your personal budgets.

The first key is to make sure you that you know what money you have coming in and what money you have going out. As you can see at the top of our budget, we combine all the money we think we’ll make for the month (net) and set a goal. That figure represents what we anticipate will come into our family. Now, notice that you don’t see anywhere on our sheet a fund for taxes; that’s because we don’t track them. We guess about how much will be taken out for each of us, and track ONLY our net income. It just makes things easier.

Next, you need to make sure you have a column for your goals, actuals, and the difference between the two. In other words, using some basic excel programming, you can have it automatically calculate the difference between the actual income brought in vs. what your goal was; thus, giving you a figure that either shows a positive or negative number, indicating whether you exceeded or got less than what you thought for the month. You’ll be using these columns for all of your expenses as well! The blacked out figures to the right of those columns are where you put in the various entries. In this case, this is where we place our various incoming cash flow.

Use colors, bold, and various lines to break things up a bit, making your budget easier to read. Click here for basics in excel programming. Using the examples shown above, make your budget using excel! You’ll be glad you did!

REMEMBER – You need to have accounts for EVERYTHING! No dollar should be left unaccounted! Each time you spend money, you should be able to look back at your budget and find a specific account to place it in. For those that know much about accounting, there is never an inflow or outflow that doesn’t have a debit or credit; the same principle applies here.